Flat6Labs Sees Potential in Egypt Startups

Egypt might not seem like the ideal place to do business amid political and economic turmoil since the 2011 revolution, but new ventures are still cropping up – helped increasingly by venture capitalists eyeing the longer-term growth potential there.

Incubators such as Flat6Labs, created and funded by Sawari Ventures, are looking to support local startups by providing up to $20,000 in capital, besides mentorship, training, and legal support.

“A lot of young, bright-eyed entrepreneurs need that help,” said Ahmed Alfi, founder of Flat6Labs and co-founder of Sawari, a venture capital firm based in Cairo.

“Egypt has a lot of engineering talent and not a lot of financial support or even the ecosystem to help,” he added.

Mohammed Khallaf, a 21 year-old mechanical design engineer who graduated from Cairo University, is one such entrepreneur. It all began some five months ago for him, spurred by Egypt’s fuel crisis that left many homes, businesses and even hospitals without electricity several hours a day.

Mr. Khallaf along with some like-minded friends started Tagaddod, which means “renewal” in Arabic. The company intends to provide Egyptians with an environment-friendly fuel alternative, which is converted from waste vegetable oil and can easily be used in most industries.

“Nobody in Egypt has implemented this yet because the only entity that regulates fuel sales is the General Authority for Petroleum and we are waiting on their approval now,” Mr. Khallaf told The Wall Street Journal. “Flat6Labs helped us transform our idea into a product ready to operate in the market and to receive investments,” he added.

Flat6Labs has already invested in about 36 startups in the past two years. It typically acquires a 10-20% stake in the company that joins its mentoring program and aims to invest in startups that have the potential to become leading companies in the Middle East and North Africa region, and not just Egypt.

So when a company like Ogra, which means “fare” in Arabic decided to provide a taxi service app for the Middle East, Flat6Labs saw potential, Mr. Alfi said.

Ogra was co-founded by Edward Disley, a British expat currently living in Cairo. The new service aims to tackle another one of Egypt’s vexing problems – efficient local transport. The app connects customers with the nearest cab drivers.

“Our number one problem has actually been getting the funding, if it wasn’t for Flat6Labs and Sawari Ventures, we wouldn’t be around,” said Mr. Disley. After a successful launch in Cairo, the company has set up an office in Saudi Arabia and is eyeing offers in Turkey, Jordan, Qatar, Tunisia, and Italy, he added.